It was pretty much a neutral week. We saw some gains at the start of the week, and then they were erased.
However, we had a really busy week concerning the market news.
After the data release, some analysts and most investors have started discussing the cooling PPI and Core PPI; they argue that it indicates a peak in inflation levels. Most investors now suggest the FED to slow down its tightening process. However, on the other hand, other analysts argue that a weak dollar would increase inflation again and start back the whole cycle. This week, we have a few crucial data; Services PMI, Manufacturing PMI, More Jobless Claims, and an FOMC Meeting. So let’s take a look at what happened the previous week:
- Amazon laid off 10,000 employees.
- Dollar weakened on peak interest rate expectations.
- Berkshire Hathaway took an approximately $4 billion stake in TSMC (Taiwan Semiconductor).
- Walmart went up more than 6% after a promising outlook. Announced $20 billion share buyback.
- US October PPI rose 8.0% year on year —30 basis points lower than expected, the lowest level since July 2021.
- US October Core PPI rose 6.7% year on year —50 basis points lower than expected.
- US October NY Empire State Manufacturing Index went up +4.50 —9.50 points better than expected, suggesting a recovery after the mild technical recession we encountered this year.
- US stock futures soared after better-than-expected PPI and Manufacturing Index reports.
- Investors now expect a 50 bps hike instead of the highly anticipated 75 bps.
- Stocks erased the gains after the reports of a missile hitting NATO country Poland.
- Former President Trump announced his 2024 US presidential run.
- UK October CPI rose 11.1% year on year —40 basis points more than expected.
- Target stock was down 15% pre-market after the terrible worse-than-expected earnings report.
- US retail sales went up 1.3% month on month —30 basis points better than expected.
- US October Jobless Claims fell to 222,000 —3,000 better than expected.
- US Philadelphia FED Manufacturing Index fell to -19.4 —13.2 points worse than expected.
- St. Louis FED’s president James Bullard said the FED policy is not restrictive enough yet. Suggested a rate between five and seven percent. US Stocks dropped as the FED officials talked tough on the rates.
- Nancy Pelosi stepped down as US House democratic leader.
- Amazon said the layoffs would continue next year.
- Japan’s Core CPI hit a 40-year high while having negative annualized 1.2% Q3 GDP growth. Some investors speculate stagflation because of the unemployment rate increase in the last month.
Overall Market Indexes & Commodities Moves
DOW = 0.2%
S&P 500 = -0.3%
NASDAQ = -0.5%
RUSSELL 2000 = -0.9%
Gold = -0.9%
Silver = -3.8%
Oil = -6.2%
Let’s look at the most undervalued stocks list on our website:
Our Two Least Performing Stocks
Amazon went down primarily because of macroeconomic problems. As mentioned in the news section, Amazon laid-off 10,000 people and still thinks there will be hard times next year, opening the door for the laying of even more people.
The reason for the PayPal stock is: the fintech sector was rocked on Wednesday by the news that Twitter has filed the initial regulatory paperwork required for its platform to handle payments. Largely as a result, two of the sector’s biggest names (which includes PayPal) took hits to their share prices on the day.
TIL: What is stagflation?
The economic cycle known as stagflation is characterized by weak growth, a high unemployment rate, and inflation. This confluence is particularly challenging for economic officials to manage since trying to address one of the issues might make another worse.
Next week’s important macroeconomic data/ policy decisions to be released are:
Services PMI, Manufacturing PMI, Jobless Claims, FOMC Meeting
We believe this week will be quite as unpredictable as it was last week. We will see how the investors will behave after the Services PMI, Manufacturing PMI, Jobless Claims, and FOMC Meeting results. Until then, stay tuned for the next week.
DISCLAIMER: THIS TEXT CONTAINS NO INVESTMENT ADVICE.